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US-China Trade War Opens Window of Opportunity for Russia

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MOSCOW, Russia – In his speech at the Russia Calling 2018 forum, Russian President Vladimir Putin made a historical statement: the US trade war with China not only harms the global economy, but also creates a “window of opportunity” for the development of Russia’s economy.

Remembering the tariff war

Following the imposition of US tariffs on Chinese products, China responded with similar countermeasures. In September, Americans introduced new 10 percent tariffs, worth $200 billion on hundreds of Chinese products. China has replied with rates of between 5% and 10% on various consumer goods of the United States in the amount of $60 billion.

In addition to the introduction of tariffs and taxes, China drastically reduced US fuel imports and, in October, completely reduced US imports of oil and natural gas (LNG) to zero, according to data from the General Administration of Customs China. At the same time, the supply of Russian oil to the Chinese markets has reached a historic level.

China-US tariff crisis means more opportunities for Russia

China imported more than 3.5 million tons of US liquefied natural gas in 2017. Comparatively, in 2018, LNG imports did not reach 1 million tons until August, compared to 2.1 million tons in 2017. At the same time, Beijing increased gas imports by approximately 17%, which means a window of opportunity opening up for Moscow.

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Technological and logistical issues

Russia cannot provide more gas to China for technological reasons: Russian gas exports are traditionally piped, while Beijing buys especially LNG. Until Russian pipelines to the east are ready, competing exporters continue to be the main LNG suppliers to Chinese markets: Australia, with 2.27 million tonnes in October and Qatar at 960,000 tonnes.

Russian state oil company seeks joint growth with Asian country

In the area of ​​oil, largely due to the traditional cooperation between Russian and Chinese companies, the dynamics is more positive. In the oil supply market to China, Russia and Saudi Arabia occupy the main positions.

According to the director of state-owned Rosneft, Igor Sechin, who spoke at the Russian-Chinese energy forum in Beijing, energy cooperation between Russia and China has already reached an “unprecedented level.” Only in projects already approved by 2035, the total amount of business between Rosneft and Chinese companies will exceed half a trillion dollars at the current rate.

These volumes are not limited exclusively to the supply of fuels. As an example, Rosneft and the Chinese company Beijing Gas are creating a joint venture to develop a network of gas compression stations in Russia. Based on this partnership, 170 stations will be built in Russia. The Russian company also reported that during the visit of Igor Sechin, Rosneft and the National Petroleum Corporation of China signed a memorandum of scientific and technical cooperation. The main objective is to work together in the exploration and extraction of oil and gas in the Arctic and Far East and in the development of the North Sea Route.

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